Umeme Power Supply Agreement
The concession provides that Umeme will provide up to 60,000 new connections in the first five years, reduce losses and improve collection rates. Service delivery will be improved by facilitating overloading of lines and substations and replacing weak driving poles. Access to electricity is also being developed for households, schools, clinics, hospitals and water systems. More accessible and reliable power should stimulate economic activity and generate tax revenue for the government. MIGA`s participation in this project encourages South-South investment in a country only for IDA. The World Bank is also participating in this project through a $5 million guarantee, which serves as a backstop to the letter of credit as part of the project`s security package. Umeme will operate an electricity distribution concession in Uganda for 20 years. Globeleq will provide the consortium with commercial and financial know-how, while Eskom will provide much of the technical know-how needed to transform the underlying business. The distribution network consists of 13,000 km of high and low voltage airlines that extend throughout the country, with most customers focusing on the semi-urban strip, from Entebbe to Jinja via Kampala. MIGA has $40.5 million in guarantees to Globeleq Ltd. of Bermuda and Eskom Enterprises (Pty.) Ltd.
of South Africa, which covered its $45 million interest in Umeme Ltd. of Uganda and shareholder loans. The guarantees have a duration of 20 years and cover the risks of transfer restrictions, war and disturbances and breach of contract.